HB 2404 Summary

• Increases Hawaii income tax standard deduction amounts effective for taxable years beginning after December 31, 2023: $10,000 for joint returns/surviving spouses, $7,500 for heads of household, and $5,000 for single filers and married filing separately (up from previous amounts of $4,400, $3,212, and $2,200 respectively).

• Adjusts income tax bracket thresholds for all filing statuses for taxable years beginning after December 31, 2023, with amounts increased to reflect 2024 tax year changes (e.g., joint return first bracket threshold increases from $4,800 to $5,126).

• Establishes annual cost-of-living adjustment (COLA) mechanism beginning in 2025, requiring the director to recompute standard deduction amounts and income tax brackets each December 15 by multiplying prior year amounts by the COLA factor based on the Urban Hawaii Consumer Price Index or Chained Consumer Price Index.

• Defines "cost-of-living adjustment factor" as 1.0 plus the percentage change in the specified consumer price index from July of the preceding calendar year to July of the current calendar year; no adjustment occurs if the factor is zero or negative.

• Effective date of July 1, 3000, applies to all taxable years beginning after December 31, 2023.